SYCAMORE – The Sycamore School District 427 Board voted to restructure some of its outstanding debt Tuesday, lessening the projected increases in repayment in the short term, but an uncertain tax and interest rate landscape in the future means the long-term effects are unclear.
Jennifer Currier, associate vice president for public finance at PMA Securities, presented the board with three options to reorder the district’s debt, along with the option to do nothing and stick with the current plan.
The board requested she return with another option after its last meeting. Currier previously presented the board with options of 4 percent and 5 percent net levy increases. The new option was a 6 percent increase.
“The debt service amount is higher, but it will level off sooner,” Currier said.
Without restructuring the debt, the median homeowner in the District 427 would see a $316 increase in their estimated payment for the bond and interest levy from their 2017-18 tax bill to their 2018-19 tax bill, according PMA documents. The board hoped to avert this spike in tax bills for residents.
All three other options presented lowered that increase by between $25 and $36. But the tax reform discussion in Washington adds some doubt about how much could be saved.
Several items in the House of Representatives’ proposal could eliminate tax breaks for some municipal bonds, Currier said, and would affect the district’s plan.
“What is our timeline to make a decision?” board member Jeff Jacobson asked. He wanted to have more time to look over the options presented.
District Chief Financial Officer Nicole Stuckert said a decision had to be made at the meeting in order to enact some change in 2017. Currier agreed that completing the action in 2017 would be better.
“I’d like to refinance as much as possible up front,” Jacobson said. He noted that interest rates were as low as the district would probably see and he did not want to risk having to issue bonds later at higher rates.
“It would be easy if we had a crystal ball,” he said.
Board President Jim Dombek said he would also like to refinance as much as possible upfront, but that would also increase the debt load on the taxpayer.
“We have to balance that with the burden we place on the taxpayer,” he said.
The board voted to go with the
6 percent annual increase, the new option presented Tuesday. The median homeowner will see their tax bill for the bonds and investments levy increase $36 on their 2018-19 tax bill, Currier said.
Dombek said it wasn’t an easy decision because of the uncertainty caused by other divisions of government.
“We’re put behind the 8-ball by government in action all the time,” he said.